Buy Bristol-Myers, Says Citi; Stock Jumps 7%

By Sam Mamudi

Bristol-Myers Squibb (BMY) stock is up more than 7% today, and leading the Standard & Poor’s 500 index, thanks in part to a Citi Research note which upgraded the company to Buy and raised the stock’s price target to $55 from $33.

As analyst Andrew Baum writes:

We have increased our forecasts by up to 27% following an in-depth analysis of the opportunities for BMY’s immunotherapy portfolio outlined in our companion report…While we are unable to predict the dominant indications or even combinations for BMY’s checkpoint portfolio, we are confident that the portfolio in aggregate will likely exceed $10bn in 2022. We anticipate BMY to grow revenues at 10% CAGR between 2014 and 2019, with EPS growth at 17% CAGR over the same period aided by a mix driven increase in contribution margins. Further out, we have extended the anticipated introduction of generic competition for Eliquis unto 2026 (compared with 2023 previously). We note the acceptance of SPC (Supplementary Protection Certificate) in the EU extending patent protection until 2026 and we assume BMY is seeking a patent term extension in the US to the same time period…

Among global multinationals, BMS appears most closely aligned with our “Shrink, Smarten and Spin” industry framework given its well-entrenched search and development strategy and historically strong execution track record. BMS also has several pipeline assets in the exciting immunotherapy space that is likely to have a paradigm-changing impact on treatment of several cancers. We believe immunotherapies will likely become the treatment backbone in up to 60% of cancers over the next 5-7 years, presenting a $35bn revenue potential for the industry.

As Baum writes, he sees Bristol-Myers’ potential as similar to that of some of his favorite biotechnology companies:

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